The International Monetary Fund used a wheeze to lend huge amounts of money to Greece in 2010 without requiring that existing Greek debt should be restructured, even though it was (and is) clearly unpayable. The wheeze was to declare that if there was a possibility that financial markets would freak out about debt being restructured, but the country still needed the money, the IMF could lend the money anyway. That was called the systemic exemption. It did succeed in ramming through the money for Greece, but not much else about it has worked, so it's being abolished. Except that it hasn't entirely gone away --
The new policy would also allow the IMF to deal with rare “tail-event” cases where even a reprofiling [short extension of due date] is considered untenable because of contagion risks so severe that they cannot be managed with normal defensive policy measures. In these rare cases, the IMF could still provide large-scale financing without a debt operation [restructuring], but would require that its official partners also provide financing on terms sufficiently favorable to backstop debt sustainability and safeguard IMF resources. This could be done through assurances that the terms of the financing provided by other official creditors could be modified in the future if needed (say in the event of downside risks materializing). If official partners could not provide such assurances (or if the member’s debt was deemed unsustainable at the outset), the terms of official financing would have to be sufficiently favorable to bring debt to the green zone.
So just at the time when financial market behaviour is looking more puzzling than ever, the exemption is still there for events declared to be "rare" and there's big wiggle room in the provision for other partners (such as the Eurozone's beloved Troika) to simply promise that they'll do something if something particular happens in the future. The financial system thrives on risk because of an assumption that if really bad risk materializes, a different set of rules than normal will apply. And that's the signal they're still getting from the IMF.
The new policy would also allow the IMF to deal with rare “tail-event” cases where even a reprofiling [short extension of due date] is considered untenable because of contagion risks so severe that they cannot be managed with normal defensive policy measures. In these rare cases, the IMF could still provide large-scale financing without a debt operation [restructuring], but would require that its official partners also provide financing on terms sufficiently favorable to backstop debt sustainability and safeguard IMF resources. This could be done through assurances that the terms of the financing provided by other official creditors could be modified in the future if needed (say in the event of downside risks materializing). If official partners could not provide such assurances (or if the member’s debt was deemed unsustainable at the outset), the terms of official financing would have to be sufficiently favorable to bring debt to the green zone.
So just at the time when financial market behaviour is looking more puzzling than ever, the exemption is still there for events declared to be "rare" and there's big wiggle room in the provision for other partners (such as the Eurozone's beloved Troika) to simply promise that they'll do something if something particular happens in the future. The financial system thrives on risk because of an assumption that if really bad risk materializes, a different set of rules than normal will apply. And that's the signal they're still getting from the IMF.
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